Ukraine: A Transit Country in Deadlock?

Summary:

Should we consider Ukraine a transit country in deadlock, and reduce its energy role just to that of a transit country? Definitely not, because Ukraine is at once a large gas consumer and producer, and possesses massive storage capacity. But the economic and political situation of the country is alarming, even without considering the possibility of another gas crisis.

Without such a crisis, however, the event of Ukrainian bankruptcy would attract less broad international attention simply because it would not have direct impact on European gas consumers. Will there be a new transit crisis this winter? Failure by Ukraine to honor its payment deadlines on the 7th of each month would certainly precipitate it, and that possibility cannot be excluded. Both on the Ukrainian and on the Russian side, a number of factors exist that, combined, could easily trigger a domino effect whereby the situation would become uncontrollable, as was the case in January 2009.

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